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• Identified as adding "special character" to specific neighbourhoods and business areas.

• Assessed as having significant heritage value.

The rules in each category also differ for each area and depend on the use of the property.

Mt Eden, Grey Lynn and Herne Bay have been identified as special character suburbs, and other suburbs, like Westmere, have extensive groupings of pre-1944 bungalows.

In Auckland, 22 per cent of HNZ's terraced housing and apartments were built before 1944, while 31 per cent of its mixed housing dwellings in urban areas and about 14 per cent in suburban areas and single house zones also fell into the category.

HNZ has not said if it intends to sell the properties if the limits are lifted and told the Herald it was not seeking to increase sale values.

But Labour's social development spokeswoman Jacinda Ardern was sceptical about its plans. "In central Auckland the [HNZ] sites I'm aware of, they sold into private ownership."

Greg Groufsky, chief executive for HNZ, said lifting the classification would free up hundreds of properties around Auckland for development.

"Reconfiguring our 1400ha land holdings will not only allow us to adequately increase and improve our own social housing provision, but release under-utilised areas for developments that increase the city's overall affordable housing stock. We're not seeking to remove overlays to enhance potential sale value."

The Grey Lynn Residents Association, which has a number of heritage and special character state homes in its neighbourhood, were dismayed at the corporation's submission. "We are empathetic to Housing NZ's wish to house more people ... [but] the heritage overlay is absolutely critical to the fabric of Grey Lynn," said spokeswoman Nicola Legat.

Lynne Butler, Freemans Bay Residents Association co-chair, said: "To start pepper-potting [properties in] Freemans Bay will have a huge impact on the character of the streets."